US Government Promises To Forgive Student Debt… If You Work For Them

Submitted by Simon Black via Sovereign Man blog,

He had a vision for what the state could be.

 

His vision was a state that was intricately involved in every person’s life from cradle to the grave.

 

It was responsible for their education, it was their place of work and source of income, and it would monitor and guide the entertainment for all of the society.

 

Life would be characterized by the government provision of care and support throughout. People would grow to rely upon the state in every aspect of their lives, and they would have no reason to seek out alternatives.

 

Eventually people would become dependent on the state’s survival for their survival. Thus their lives would then be dedicated to the ‘greater good’, with the individual existing simply for the state.

This terrifying vision of a dystopian society could only be the construct of an author like George Orwell or Ayn Rand, right? Something you would only see elaborated on the pages of fiction.

In fact, this was the vision of Otto von Bismarck, Chancellor of Imperial Germany in the 19th century.

And this wasn’t just a dream. It was a strategy.

From government healthcare at birth to education in a government school, followed by a career in civil service, and a government pension in old age, the state was with you from beginning to end.

One of the most important stages in the life-long relationship between the state and the individual in Bismarck’s mind was through employment.

There you were directly working to support the government’s aims (for the greater good of course), while at the same time being wholly dependent on them for your survival.

This was the cornerstone of his plan for the strength of the empire—having a populace entirely dependent on (and thus committed to) the state.

“My idea was to bribe the working classes, or shall I say, to win them over, to regard the state as a social institution existing for their sake and interested in their welfare,” Bismarck explained.

You can be sure that Bismarck would approve of modern society.

Today in the Land of the Free, everyone is required to pay into the Social Security system, and over 90% of students go to public schools.

With the passage of the Affordable Care Act, the state is exerting its control over your medical care. And now with a new bill comes the crown jewel of state employment.

Presenting Senate Bill 2726: the Strengthening Forgiveness for Public Servants Act.

If passed, the bill aims to get young people into government employment by promising to forgive their student loan debt.

Could they be any more devious?

First they’ve managed to let inflation absolutely explode, especially when it comes to the cost of university education.

Then they actively encourage students to pay for said education by going deeply into debt, often with government loans funded by the [Chinese] taxpayer.

This created a massive class of young people who are now deeply enslaved by their state debt as they vie for jobs as assistant manager at the Gap.

And now the government has created a way out. Young people need only become public servants. Emphasis on ‘servants’.

Somewhere Otto von Bismarck is smiling.




via Zero Hedge http://ift.tt/1rwh94p Tyler Durden

Should Employers Be Forced to Hire Cannabis Consumers?

Under Colorado law, employers are
forbidden
to fire people for “any lawful activity” in which
they engage on their own time outside the workplace. Yesterday the
Colorado Supreme Court
considered
the novel question of whether “any lawful activity”
includes cannabis consumption that is permitted by state law but
still a crime under federal law. Although the case involves medical
use, it has broader implications now that Colorado has legalized
recreational use as well.

The plaintiff is Brandon Coats, a 34-year-old quadriplegic who
was fired from his job with Dish Network in 2010 after he tested
positive for nonpsychoactive traces of marijuana. Coats uses
cannabis to relieve the seizures and muscle spasms he has suffered
since he was injured in a car crash as a teenager. Such cannabis
consumption was allowed by state law when he was fired but
prohibited by federal law, which is still the case. Dish Network
has a “zero tolerance” policy regarding illegal drug use,
regardless of whether it affects job performance. Coats argues that
state legality is all that’s required to make an activity “lawful.”
His former employer disagrees, and so did the courts that have
heard his case so far.

Th Denver Post
reports
that the justices were “mostly scratching their heads”
at yesterday’s hearing, and I certainly am no better situated to
decide whether a law driven by a desire to protect tobacco smokers
should be interpreted to protect pot smokers as well. But I will
say this much: The law should never have been passed to begin with.
Although I believe that drug policies such as Dish Network’s are
stupid, I also believe that employers have a right to adopt stupid
drug policies (along with any other conditions of employment that
people voluntarily accept when they take a job). Such arbitrary
rules surely would be
much less common
in the absence of prohibition—a drug policy
that, unlike Dish Network’s, is imposed at the point of a gun. But
forcing people to hire cannabis consumers is wrong for the same
reason that cannabis prohibition is wrong: It posits threats of
violence as an appropriate response to activities that violate no
one’s rights.  

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David Tepper: Bill Gross “Who Cares?”, Regrets FNMA, Economy “Good”, Stocks Not Expensive

He's back. A month after Appaloosa's David Tepper explained the end of the bond bull market was here (and 10Y rates are now 5bps lower), the trend-following master-of-the-universe explained to Bloomberg TV's Stephanie Ruhle and Erik Schatzker how the departure of Bill Gross from PIMCO was "nothing… who cares?"; why "the US economy is pretty good", how junk bonds are at "fair value" and stocks are cheap as "multiples are not high." Finally he explains how he "wished he didn't have any investment" in Fannie Mae and Freddie Mac and clarifies in his billionaire-all-knowing-ness how he is sure the United States can contain Ebola.

 

Headlines:

  • *APPALOOSA'S TEPPER COMMENTS ON ECB ACTIONS IMPACTING BONDS
  • *TEPPER SAYS DRAGHI HASN'T DONE ANYTHING YET
  • *TEPPER SAYS DRAGHI HAS TO STOP THE NONSENSE
  • *TEPPER SAYS BILL GROSS EXIT MEANS NOTHING FOR MARKETS
  • *TEPPER SAYS BILL GROSS EXIT LONG-TERM NOT RELEVANT
  • *TEPPER SAYS U.S. EQUITIES INTERESTING ON MULTIPLES BASIS
  • *TEPPER SAYS U.S. ECONOMY PRETTY GOOD, STOCKS NOT HIGH MULTIPLES
  • *TEPPER SAYS HIGH YIELD IS AT MID-POINT OF FAIR VALUE
  • *TEPPER SAYS HE WISHES HE DIDN'T HAVE FANNIE, FREDDIE INVESTMENT
  • *TEPPER SAYS APPEAL FOR FANNIE, FREDDIE POSSIBLE

Full clip:

 

Excerpted Transcript:

On Bill Gross:

RUHLE: What does this Bill Gross exit mean for the market?

 

TEPPER: Nothing. Who cares?

On Draghi:

TEPPER: They haven't done any QE yet. So let them start some QE. But the beginning of the end was basically saying that when you create inflation and some inflation in the eurozone, then the bond market is going to start going down. If you don't create inflation in the eurozone of some sort or you don't stop the deflation, then that might not happen. But I do think that if they go in action, if they get in action, if they really get in action you will start creating inflation at some point in time. Until you do that, things will go where they go. And you can look at the curves over there.

 

TEPPER: Yeah, I think that's probably right to a certain extent. I don't think you want to fight it, but you've got to understand what it's going to mean. So the extent that if he's really in action then you don't want to fight him, but he has to really get in action. You have to start QE. This negative interest rates doesn't necessarily have the effect of creating money. It doesn't necessarily have the effect of creating inflation. So if you want to do that, do that. But right now he's done nothing. So let him start.

On Stock Valuations:

TEPPER: Look, the US economy's pretty good. That's all. But with the stock markets, I think that you really aren't at – at high multiples right now.

 

TEPPER: Well I don't think it's high because if you – if you believe interest rates are 4 or 4.5 percent, 16.5 seems like about the right multiple. But I don't think we're at the 4.5 percent 10-years. We're at 2.5 percent 10-years or unfortunately 2.43 or something like that right now. And next year at 14

On Bonds:

One big employment print and you will go down to – these yields here will come down in the US, okay?

 

However, you’re so close to go the other way.

 

That's what makes this a very tricky market. So if you have – listen, if you have big employment numbers that take you into the 5s, it's going to start worrying the Fed about labor push (ph) inflation at some point. And if you do get inflation in Europe to start – stop going down, inflation to stop going down or deflation looks like it'll start taking over, at the same time you'll have the market's yields turn up here. So it's tricky. And until that happens, you could have pressure on yields down.

 

So the question is is there enough – are you getting paid enough for the risks in any kind of place in the yields? Because there's a lot of chances to lose money.

On US Equities:

TEPPER: Well I kind of told you. Listen, it's – it's interesting on a multiple basis and – but you have to have certain things happening. You’ve got to have Europe stop – stop the nonsense, so to speak, Draghi stop the nonsense. So that's kind of it.

On Warren Buffett:

TEPPER: Warren Buffett? He's an interesting guy. I'll say that.

On Ebola:

TEPPER: I think the United States, if any country can contain the risk, the United States can contain the risk.

*  *  *

SCHATZKER: Summing Up: the high-yield market in the mid-point of fair value. The bond bubble if Draghi undertakes QE is going to blow up. Equities okay with next year's earnings.




via Zero Hedge http://ift.tt/1uCnNqX Tyler Durden

David Tepper: Bill Gross "Who Cares?", Regrets FNMA, Economy "Good", Stocks Not Expensive

He's back. A month after Appaloosa's David Tepper explained the end of the bond bull market was here (and 10Y rates are now 5bps lower), the trend-following master-of-the-universe explained to Bloomberg TV's Stephanie Ruhle and Erik Schatzker how the departure of Bill Gross from PIMCO was "nothing… who cares?"; why "the US economy is pretty good", how junk bonds are at "fair value" and stocks are cheap as "multiples are not high." Finally he explains how he "wished he didn't have any investment" in Fannie Mae and Freddie Mac and clarifies in his billionaire-all-knowing-ness how he is sure the United States can contain Ebola.

 

Headlines:

  • *APPALOOSA'S TEPPER COMMENTS ON ECB ACTIONS IMPACTING BONDS
  • *TEPPER SAYS DRAGHI HASN'T DONE ANYTHING YET
  • *TEPPER SAYS DRAGHI HAS TO STOP THE NONSENSE
  • *TEPPER SAYS BILL GROSS EXIT MEANS NOTHING FOR MARKETS
  • *TEPPER SAYS BILL GROSS EXIT LONG-TERM NOT RELEVANT
  • *TEPPER SAYS U.S. EQUITIES INTERESTING ON MULTIPLES BASIS
  • *TEPPER SAYS U.S. ECONOMY PRETTY GOOD, STOCKS NOT HIGH MULTIPLES
  • *TEPPER SAYS HIGH YIELD IS AT MID-POINT OF FAIR VALUE
  • *TEPPER SAYS HE WISHES HE DIDN'T HAVE FANNIE, FREDDIE INVESTMENT
  • *TEPPER SAYS APPEAL FOR FANNIE, FREDDIE POSSIBLE

Full clip:

 

Excerpted Transcript:

On Bill Gross:

RUHLE: What does this Bill Gross exit mean for the market?

 

TEPPER: Nothing. Who cares?

On Draghi:

TEPPER: They haven't done any QE yet. So let them start some QE. But the beginning of the end was basically saying that when you create inflation and some inflation in the eurozone, then the bond market is going to start going down. If you don't create inflation in the eurozone of some sort or you don't stop the deflation, then that might not happen. But I do think that if they go in action, if they get in action, if they really get in action you will start creating inflation at some point in time. Until you do that, things will go where they go. And you can look at the curves over there.

 

TEPPER: Yeah, I think that's probably right to a certain extent. I don't think you want to fight it, but you've got to understand what it's going to mean. So the extent that if he's really in action then you don't want to fight him, but he has to really get in action. You have to start QE. This negative interest rates doesn't necessarily have the effect of creating money. It doesn't necessarily have the effect of creating inflation. So if you want to do that, do that. But right now he's done nothing. So let him start.

On Stock Valuations:

TEPPER: Look, the US economy's pretty good. That's all. But with the stock markets, I think that you really aren't at – at high multiples right now.

 

TEPPER: Well I don't think it's high because if you – if you believe interest rates are 4 or 4.5 percent, 16.5 seems like about the right multiple. But I don't think we're at the 4.5 percent 10-years. We're at 2.5 percent 10-years or unfortunately 2.43 or something like that right now. And next year at 14

On Bonds:

One big employment print and you will go down to – these yields here will come down in the US, okay?

 

However, you’re so close to go the other way.

 

That's what makes this a very tricky market. So if you have – listen, if you have big employment numbers that take you into the 5s, it's going to start worrying the Fed about labor push (ph) inflation at some point. And if you do get inflation in Europe to start – stop going down, inflation to stop going down or deflation looks like it'll start taking over, at the same time you'll have the market's yields turn up here. So it's tricky. And until that happens, you could have pressure on yields down.

 

So the question is is there enough – are you getting paid enough for the risks in any kind of place in the yields? Because there's a lot of chances to lose money.

On US Equities:

TEPPER: Well I kind of told you. Listen, it's – it's interesting on a multiple basis and – but you have to have certain things happening. You’ve got to have Europe stop – stop the nonsense, so to speak, Draghi stop the nonsense. So that's kind of it.

On Warren Buffett:

TEPPER: Warren Buffett? He's an interesting guy. I'll say that.

On Ebola:

TEPPER: I think the United States, if any country can contain the risk, the United States can contain the risk.

*  *  *

SCHATZKER: Summing Up: the high-yield market in the mid-point of fair value. The bond bubble if Draghi undertakes QE is going to blow up. Equities okay with next year's earnings.




via Zero Hedge http://ift.tt/1uCnNqX Tyler Durden

U.S. Sends Billions to Israel—and to Countries That Don’t Recognize Israel

Israeli Prime Minister Benjamin Netanyahu met with
President Obama today, and the two talked about the need to
keep Iran
from getting a nuclear weapon
.  The prime minister of
Israel and the president of the United States have generally
enjoyed close relations, regardless of who holds the office, since
the State of Israel declared independence in 1948. 

In fact, American recognition of the controversial declaration
helped Israel build legitimacy as a state. To this day, about 31
countries don’t formally recognize the State of Israel. Iran’s one
of them, and we may not give them any money, but while we spend
$3.1 billion a year on aid to Israel we also spend $4.1 billion on
aid to countries that don’t formally recognize Israel.

Hypocritical U.S. Foreign Aid Infographic 

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via IFTTT

U.S. Sends Billions to Israel—and to Countries That Don't Recognize Israel

Israeli Prime Minister Benjamin Netanyahu met with
President Obama today, and the two talked about the need to
keep Iran
from getting a nuclear weapon
.  The prime minister of
Israel and the president of the United States have generally
enjoyed close relations, regardless of who holds the office, since
the State of Israel declared independence in 1948. 

In fact, American recognition of the controversial declaration
helped Israel build legitimacy as a state. To this day, about 31
countries don’t formally recognize the State of Israel. Iran’s one
of them, and we may not give them any money, but while we spend
$3.1 billion a year on aid to Israel we also spend $4.1 billion on
aid to countries that don’t formally recognize Israel.

Hypocritical U.S. Foreign Aid Infographic 

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via IFTTT

Deflation As A Precursor Of A Weimar-like Inflation

Most people consider deflation the biggest enemy of the gold price, as gold is generally seen as an excellent hedge against inflation. Whilst this is generally correct, it doesn’t mean that a (short) period of deflation is a prelude of a crashing gold price.

As the very low inflation rate (and as there’s even official deflation in Italy and Belgium at this point in time), the European Central Bank is taking additional measures to pump several hundreds of billions of euros into the financial system which should theoretically boost the consumption pattern of the Eurozone citizens. It’s no secret the ECB wants the inflation rate to be ‘close to but not exceeding’ 2%, which is deemed to be the most sustainable number by several economists. At an inflation rate of 2% companies can increase their revenues fast enough, without the consumers being hit too hard.

The ECB has no problem to expand its balance sheet to the level of 2012, when the total balance was approximately 1000 billion euros higher than where it is today. On top of purchases of asset-backed securities, the ECB will directly pump cash in the banking system by making 400B EUR in 4-year loans available for the banks of the Eurozone at a cost of 0.15% per year. This should lead to an increased spending and increase the inflation rate as well, until the inflation rate is out of the danger zone and is hovering around the 2% mark again.

Not everybody in the board of the ECB is happy with this, and the president of the Bundesbank has openly criticized the ECB for causing inflation. In several interviews, president Jens Weidmann has stated that the ECB shouldn’t really intervene to actually create inflation. One would think that the governing council of the ECB would listen to a man whose country has experienced the worst inflation nightmare of all industrialized countries, less than 100 years ago.

If you look back at the official statistics of the horror-inflation during the Weimar-republic, it’s clearly visible that after a first bump of inflation there was actually a period of deflation before the snowball effect started to work. In a working paper, Steven Webb was able to gather all data from the period 1919-1923, and as you can see on the next image, the period of inflation was paused for a few months when there was deflation. Thereafter, the inflation rate picked up again and actually accelerated to a level of 7100% (yes, more than seven thousand percent) in October 1923.

Weimar Inflation Rate 1

Weimar Inflation Rate 2

Weimar Inflation Rate 3

Source

Granted, the velocity of money, which is one of the key drivers to induce inflation, was much higher back then. But this is also the main reason why we think the ECB is pushing too hard to create inflation and will very likely overshoot its target the moment the velocity of money returns to more normal levels.

Allow us to explain this. The inflation rate is mainly determined by two parameters, the amount of money (‘money supply’) and the velocity of the money. There’s absolutely no disagreement that with the recent rounds of Quantitative Easing all over the world, the money supply has increased by a large factor. The only reason why this money-printing tactic hasn’t showed up in our ‘official’ inflation estimates is because the velocity of the money has been decreasing, which has more or less neutralized the danger of the money-printing. Because the velocity is lower, it will take the ‘new’ money longer to get fully in circulation. And this velocity is still decreasing. There are no official numbers from the ECB, but the following chart from the Fed clearly shows a continuously declining velocity of money.

Velocity of money M2

Source

So the ECB is trying to counter this decreasing velocity rate by printing more money. This is theoretically the correct measure to create the inflation, however, this is a short-term measure. If you look at the longer term picture, the average velocity of money supply is much higher than the current velocity. So even if the velocity would return to normal levels, the ECB and its counterparts all over the world will have printed too much money, and even if the money supply would gradually decline again, this won’t be sufficient to counter the effect of a much higher velocity. This is the main reason why we believe the ECB is on its way to overshoot its target as the velocity of the money supply will return to normalized levels sooner rather than later.

One would think the ECB would listen to Jens Weidmann, that it’s dangerous to create inflation as there are more parameters involved in inflation than just the money supply. As it’s very clear that during the Weimar republic there has been a period of deflation before the inflation rate shot up with triple and even quadruple figure inflation rates, we are afraid the ECB is making the same mistake all over again by increasing the money supply even further.

This case study shows that investors in the precious metals sector shouldn’t dump their holdings in a (short) period of deflation, as historically, deflation has been preceding a period of higher-than-normal inflation. As the velocity of money can’t really be influenced by the ECB, its only possibility is to increase the money supply. However, if the velocity returns to the historical average, the ECB and other central banks will have created a ‘perfect storm’ which could lead to the next Weimar-like inflation in Europe. This means that even in a deflationary period, gold and gold-related assets should continue to be a part of any investment portfolio.

Exchange rate Reichsmarken - Goldmarken

Source

As is evidenced on the previous image, the price of gold in Weimar-marken increased faster than the inflation rate, and in just 5 years time, the value of a gold mark expressed in Reichsmarken increased by almost 1,000,000,000%. Yes, that’s 1 billion percent. It’s also clear that the exchange rate decreased during the deflation period in 1920, which might be exactly what we’re experiencing now. Don’t be scared of gold during short periods of deflation. If the ECB really overshoots its inflation target, your gold-related investments will definitely have an increasing value.

** Check out our latest Gold Report!

Sprout Money offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies from Sprout Money are transformed into the Gold & Silver Report and the Technology Report.

Follow us on Twitter @SproutMoney




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Humpday Humor: Zimbabwe’s Unemployment Rate Is 4%, 10.7%, 60% Or 95%

While all the western banks are clearly envious at the facility with which Zimbabwe managed to hyperinflate away its debt mountain after simply printing a few trillion in fiat monetary equivalents, which instead of the stock market hit the broader economy, there is much more the “developed” world can learn and is learning from Robert Mugabe domain of experimental yet practical monetarism. On one hand, we find that it was former Goldmanite Mario Draghi, whose recent idea of a “Bad ECB Bank” was taken from none other than Zimbabwe:

The Reserve Bank of Zimbabwe created a company that will buy non-performing debt from banks. The Zimbabwe Asset Management Corp. will purchase the loans under commercial terms, and assign collateral and all other rights, the central bank said in its monetary policy statement yesterday.

 

The company will seek “to clean up and strengthen banks’ balance sheets and provide them with the liquidity to fund valuable projects for the economy to rebound and to mitigate loss of confidence,” the central bank said.

 

Non-performing loans at Zimbabwean banks swelled to 18.5 percent of total loans, or $705 million, in June from 1.6 percent in 2009, the central bank said. The high level of bad debt is the key threat to the country’s banking industry, Harare-based IH Securities said in May.

Why is Zimbabwe doing this? Simple: because as the Central Bank reports, Zimbabwe’s NPL ratio at various banks is as high as 91%, or roughly where it is in Europe if all the optical illusions, and Copperfieldian distractions were taken away (in addition to Cypriot deposits of course).

But that is nothing compared to the lessons none other than the US Department of Labor is about to learn from Zimbabwe’s own Bureau of Lies and Seasonality of Labor Statistics. Because in Zimbabwe the unemployment rate is either 4% or 95%. Depending on the “data” source.

Africa Check explains:

Zimbabwe’s unemployment rate “of 85%” is a ticking time bomb Morgan Tsvangirai, the leader of the country’s opposition Movement for Democratic Change (MDC), recently said.

But how accurate is the 85% figure? Depending on the source, Zimbabwe’s unemployment rate has been estimated at as low as 4% and as high as 95%.

In its 2013 election manifesto, President Robert Mugabe’s Zanu-PF party claimed unemployment levels stood at 60%. The secretary-general of the Zimbabwe Congress of Trade Union, Japhet Moyo, told a newspaper late in 2012 that the unemployment rate was between 80% and 90%. The country’s National Association of Non-Governmental Organisations (NANGO) suggested that overall unemployment in 2011 stood at 95%.

The MDC say that the figure cited by Tsvangirai was drawn from a study carried out by the party in October 2013 and “updated” in April 2014. Spokesman Douglas Mwonzora told Africa Check that it showed that “formal unemployment has risen to over 85%”. He however failed to produce a copy of the research report despite numerous requests.

Zanu-PF spokesman Rugare Gumbo said the 60% estimate referred to in the party’s election manifesto “might have been accurate then, but things have changed”. “You just have to come and do research yourself,” he added before abruptly ending the call.

Documents provided to Africa Check by the Zimbabwe Congress of Trade Unions as evidence of their 80% to 90% claim contained no data to support it.

Christopher Mweembe from NANGO said the organisation had taken the 95% estimate from the CIA World Factbook, an online database of country information and statistics published by the US Central Intelligence Agency.

The website lists unemployment estimates of 80% (2005) and 95% (2009) for Zimbabwe, but does not provide references for the data. The site also cautions readers that: “[T]rue unemployment is unknown and, under current economic conditions, unknowable”.

In stark contrast, the World Bank website lists Zimbabwe’s unemployment rate at only 4%. It bases the figure on data compiled by the International Labour Organisation (ILO). But closer examination reveals that this “modelled estimate” draws on data that is a decade old.

A labour survey published in June 2011 by Zimbabwe’s agency for national statistics, Zimstat, put unemployment at 10.7%. This figure was based on an “expanded” definition of unemployment that included people who had given up looking for work.

Figures based on a narrower “strict definition” of unemployment, which only counted people who were out of work but actively looking for a job, put unemployment at just 5.4%.

The 2011 survey provides the most recent official data on unemployment and was based on interviews conducted with Zimbabweans from 9,359 households. The Zimstat survey concluded that 6.1-million people aged 15 and older were “economically active”. (Zimbabwe’s population was estimated to be around 12-million at the time.)

As is the norm worldwide, the survey classified anyone who had worked for at least an hour – for cash or in kind – in the week preceding the survey as employed. As a result, around 5.4-million people fell into the “employed” category.

According to the survey, most of the 5.4-million Zimbabweans worked in the informal sector (84%), with only 11% (606,000) in formal employment. But only about a quarter of all those counted as employed received some form of financial compensation for their work.

Like many African countries, Zimbabwe classifies subsistence farming as “employment”, the manager for labour statistics at Statistics South Africa, Peter Buwembo, told Africa Check.

“This is reflected in the Zimbabwe figures where agriculture [both formal and subsistence] contributes 66% of total employment, while in South Africa [which does not class subsistence farming as employment]  it contributes 4.4%,” Buwembo said.

When the 2011 Zimstat labour survey was conducted it was still an internationally accepted survey practice that people who “worked for their own consumption” could be classed as employed. But this changed last year, when the international body of labour statisticians decided that work “for own final use” should not be counted as employment.

“If all countries implement this, these unrealistically low unemployment rate figures in African countries will stop,” Buwembo said.

The high informal sector component adds to the “gross underestimate” of unemployment. Tina Koziol, an economist from the South African consultant group Econometrix, explained that methods used to measure informal employment are “problematic” and that the official rate of 10.7% can be regarded “as dubious”.

“Overall, the conclusion remains that there is an absence of reliable data on Zimbabwe’s employment statistics.”

Conclusion: The data is unreliable

Very little primary data exists on unemployment in Zimbabwe. Claims that the unemployment rate is 60%, 85%, 95% or even as low as 4% – as stated by the World Bank – are not supported by reliable, current data.

The most recent labour survey conducted by the country’s agency for national statistics – which pegged unemployment at 10.7% – is three years old and has been criticised as a “gross underestimate” of the problem. The vast majority of the Zimbabweans it classified as “employed” were in fact eking out a living as subsistence farmers.

Neither the Zimstats estimate, nor the much higher unemployment estimates of 60% or 85% or 95%, can be considered reliable. Given the perilous state of Zimbabwe’s economy, unemployment levels are certainly extremely high. But to understand the scope of a problem and implement policies to help solve it you need to be able to quantify it. The first step would be a regular survey of employment and unemployment levels in the country, conducted according to the latest accepted international practices. It is something that is urgently needed.

* * *

And below is an artist’s impression of America’s own BLS as it was reading this article.




via Zero Hedge http://ift.tt/1wZwREg Tyler Durden

Humpday Humor: Zimbabwe's Unemployment Rate Is 4%, 10.7%, 60% Or 95%

While all the western banks are clearly envious at the facility with which Zimbabwe managed to hyperinflate away its debt mountain after simply printing a few trillion in fiat monetary equivalents, which instead of the stock market hit the broader economy, there is much more the “developed” world can learn and is learning from Robert Mugabe domain of experimental yet practical monetarism. On one hand, we find that it was former Goldmanite Mario Draghi, whose recent idea of a “Bad ECB Bank” was taken from none other than Zimbabwe:

The Reserve Bank of Zimbabwe created a company that will buy non-performing debt from banks. The Zimbabwe Asset Management Corp. will purchase the loans under commercial terms, and assign collateral and all other rights, the central bank said in its monetary policy statement yesterday.

 

The company will seek “to clean up and strengthen banks’ balance sheets and provide them with the liquidity to fund valuable projects for the economy to rebound and to mitigate loss of confidence,” the central bank said.

 

Non-performing loans at Zimbabwean banks swelled to 18.5 percent of total loans, or $705 million, in June from 1.6 percent in 2009, the central bank said. The high level of bad debt is the key threat to the country’s banking industry, Harare-based IH Securities said in May.

Why is Zimbabwe doing this? Simple: because as the Central Bank reports, Zimbabwe’s NPL ratio at various banks is as high as 91%, or roughly where it is in Europe if all the optical illusions, and Copperfieldian distractions were taken away (in addition to Cypriot deposits of course).

But that is nothing compared to the lessons none other than the US Department of Labor is about to learn from Zimbabwe’s own Bureau of Lies and Seasonality of Labor Statistics. Because in Zimbabwe the unemployment rate is either 4% or 95%. Depending on the “data” source.

Africa Check explains:

Zimbabwe’s unemployment rate “of 85%” is a ticking time bomb Morgan Tsvangirai, the leader of the country’s opposition Movement for Democratic Change (MDC), recently said.

But how accurate is the 85% figure? Depending on the source, Zimbabwe’s unemployment rate has been estimated at as low as 4% and as high as 95%.

In its 2013 election manifesto, President Robert Mugabe’s Zanu-PF party claimed unemployment levels stood at 60%. The secretary-general of the Zimbabwe Congress of Trade Union, Japhet Moyo, told a newspaper late in 2012 that the unemployment rate was between 80% and 90%. The country’s National Association of Non-Governmental Organisations (NANGO) suggested that overall unemployment in 2011 stood at 95%.

The MDC say that the figure cited by Tsvangirai was drawn from a study carried out by the party in October 2013 and “updated” in April 2014. Spokesman Douglas Mwonzora told Africa Check that it showed that “formal unemployment has risen to over 85%”. He however failed to produce a copy of the research report despite numerous requests.

Zanu-PF spokesman Rugare Gumbo said the 60% estimate referred to in the party’s election manifesto “might have been accurate then, but things have changed”. “You just have to come and do research yourself,” he added before abruptly ending the call.

Documents provided to Africa Check by the Zimbabwe Congress of Trade Unions as evidence of their 80% to 90% claim contained no data to support it.

Christopher Mweembe from NANGO said the organisation had taken the 95% estimate from the CIA World Factbook, an online database of country information and statistics published by the US Central Intelligence Agency.

The website lists unemployment estimates of 80% (2005) and 95% (2009) for Zimbabwe, but does not provide references for the data. The site also cautions readers that: “[T]rue unemployment is unknown and, under current economic conditions, unknowable”.

In stark contrast, the World Bank website lists Zimbabwe’s unemployment rate at only 4%. It bases the figure on data compiled by the International Labour Organisation (ILO). But closer examination reveals that this “modelled estimate” draws on data that is a decade old.

A labour survey published in June 2011 by Zimbabwe’s agency for national statistics, Zimstat, put unemployment at 10.7%. This figure was based on an “expanded” definition of unemployment that included people who had given up looking for work.

Figures based on a narrower “strict definition” of unemployment, which only counted people who were out of work but actively looking for a job, put unemployment at just 5.4%.

The 2011 survey provides the most recent official data on unemployment and was based on interviews conducted with Zimbabweans from 9,359 households. The Zimstat survey concluded that 6.1-million people aged 15 and older were “economically active”. (Zimbabwe’s population was estimated to be around 12-million at the time.)

As is the norm worldwide, the survey classified anyone who had worked for at least an hour – for cash or in kind – in the week preceding the survey as employed. As a result, around 5.4-million people fell into the “employed” category.

According to the survey, most of the 5.4-million Zimbabweans worked in the informal sector (84%), with only 11% (606,000) in formal employment. But only about a quarter of all those counted as employed received some form of financial compensation for their work.

Like many African countries, Zimbabwe classifies subsistence farming as “employment”, the manager for labour statistics at Statistics South Africa, Peter Buwembo, told Africa Check.

“This is reflected in the Zimbabwe figures where agriculture [both formal and subsistence] contributes 66% of total employment, while in South Africa [which does not class subsistence farming as employment]  it contributes 4.4%,” Buwembo said.

When the 2011 Zimstat labour survey was conducted it was still an internationally accepted survey practice that people who “worked for their own consumption” could be classed as employed. But this changed last year, when the international body of labour statisticians decided that work “for own final use” should not be counted as employment.

“If all countries implement this, these unrealistically low unemployment rate figures in African countries will stop,” Buwembo said.

The high informal sector component adds to the “gross underestimate” of unemployment. Tina Koziol, an economist from the South African consultant group Econometrix, explained that methods used to measure informal employment are “problematic” and that the official rate of 10.7% can be regarded “as dubious”.

“Overall, the conclusion remains that there is an absence of reliable data on Zimbabwe’s employment statistics.”

Conclusion: The data is unreliable

Very little primary data exists on unemployment in Zimbabwe. Claims that the unemployment rate is 60%, 85%, 95% or even as low as 4% – as stated by the World Bank – are not supported by reliable, current data.

The most recent labour survey conducted by the country’s agency for national statistics – which pegged unemployment at 10.7% – is three years old and has been criticised as a “gross underestimate” of the problem. The vast majority of the Zimbabweans
it classified as “employed” were in fact eking out a living as subsistence farmers.

Neither the Zimstats estimate, nor the much higher unemployment estimates of 60% or 85% or 95%, can be considered reliable. Given the perilous state of Zimbabwe’s economy, unemployment levels are certainly extremely high. But to understand the scope of a problem and implement policies to help solve it you need to be able to quantify it. The first step would be a regular survey of employment and unemployment levels in the country, conducted according to the latest accepted international practices. It is something that is urgently needed.

* * *

And below is an artist’s impression of America’s own BLS as it was reading this article.




via Zero Hedge http://ift.tt/1wZwREg Tyler Durden

Secret Service Chief Steps Down, Florida Cops Behave Badly, Pat Roberts Polling Poorly: P.M. Links

  • Julia Pierson, it's your turn to embarrass the administration.In the wake of the apparent
    competency gap at the Secret Service, Director Julia Pierson is

    stepping down
    .
  • Meanwhile, the man charged with jumping the fence in the White
    House and making it inside before being stopped has
    pleaded not guilty
    .
  • Florida Cop News, Part One: A Tallahassee officer has been put
    on leave during an investigation that he
    Tazed a 62-year-old woman in the back
    for no apparent
    reason.
  • Florida Cop News, Part Two: The city of Waldo, known for being
    one of the nation’s worst speed traps, has voted to
    disband its police department
    . The department was being
    investigated by the state for many issues, including ticket
    quotas.
  • The latest poll has
    Sen. Pat Roberts
    (R-Kansas) trailing behind independent
    candidate Greg Orman, by five points.
  • The ceasefire in
    Urkaine
    may be unravelling after 11 were killed in shelling
    that struck a schoolyard and bus stop in Donetsk.
  • Some school children came into contact with the man in Texas
    diagnosed with the Ebola virus,
    which is still not a reason to panic.

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